Health & Welfare Plans Newsletter

November 22, 2017

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[Guidance Overview]

Massachusetts Issues Proposed Regs Implementing Employer Medical Assistance Contribution (EMAC) Supplemental Contribution
"Beginning with the first calendar quarter of 2018, any employer who employs six or more employees in any quarter is subject to the EMAC Supplement for each such quarter.... An EMAC supplement payment is required for each quarter commencing in 2018 if one or more of an employer's employees received health insurance coverage either through the MassHealth agency or through ConnectorCare for a continuous period of at least fourteen days."
Mintz Levin

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[Guidance Overview]

IRS Begins Enforcement of the ACA's Employer Penalty (PDF)
"The IRS recently announced how it will enforce the employer shared responsibility penalty for 2015. The IRS will send Letter 226J to any large employer that the IRS believes owes a penalty for one or more months of 2015. In light of the 30-day deadline to respond to Letter 226J, employers will need to take immediate action as soon as they receive it."
Segal Consulting

What the Proposed Tax Bills Mean for Employer-Provided Fringe Benefits
"Both the House and Senate versions of tax reform propose significant changes that may reduce or eliminate the tax benefits of many popular employer-provided fringe benefits, such as dependent care assistance programs, on-premises gyms and bicycle commuting expense reimbursements. In addition, many common deductions for work-related activities -- including certain meal and entertainment expenses -- may see sweeping changes."
McDermott Will & Emery

Employees Favor Student Loan Repayment Benefits
"23% of respondents said they would forgo health care benefits for student loan repayment help; 38% said they would switch out dental care benefits; 46% would give up paid time off (PTO); 33% would sacrifice retirement benefits; and 43% would rather have a student loan repayment benefit than life insurance.... [A] little more than half (53%) of workers revealed they would consider a salary cut, as long as they received a student loan repayment benefit in replacement. If a company were to offer a student loan benefit, 84% of respondents said they would strongly consider that job over others that did not."
planadviser

Most Americans Don't Have Long-Term Care Insurance
"Only 25% of adults reported having LTC insurance. 'It is too expensive' was the most common reason chosen for not having LTC insurance (53%), ahead of 'I don't want to pay for something I may never need' (25%) ... [A]mong those who do not have LTC insurance, nearly half -- 49% -- of Americans with annual household income of $75,000 or more cited it being too expensive as a reason they don't have LTC insurance."
OneAmerica

CVS Buyout of Aetna Could Come This Month
"Dow Jones reported that the deal is being driven by the possibility of Amazon entering the pharmacy business. The deal could help CVS make better use of its retail space, selling insurance, drawing blood and other services Amazon couldn't easily match[.]"
InsuranceNewsNet.com

[Opinion]

The Biggest Health Issue We Aren't Debating: Unaffordable, High Deductibles
"High deductible plans, which require people to pay large amounts out of pocket before their medical bills are covered, are a good deal for some middle and upper income people. But many lower and moderate income Americans simply don't have $1,500 to $3,000 to pay for the colonoscopy that might save their life, or a stress test that might reveal the heart disease which is the cause of their chest discomfort."
Drew Altman, via Axios

[Opinion]

The Problem of Doctors' Salaries
"The United States pays more than twice as much per person for health care as other wealthy countries. We tend to blame the high prices on things like drugs and medical equipment, in part because the price tag for many life-saving drugs is less than half the U.S. price in Canada or Europe. But an unavoidable part of the high cost of U.S. health care is how much we pay doctors -- twice as much on average as physicians in other wealthy countries."
Politico

[Opinion]

American Academy of Actuaries Letter to Senators on Potential Adverse Consequences of Eliminating the ACA's Individual Mandate (PDF)
"[P]olicymakers should consider the potential adverse consequences of eliminating the mandate, including increases in premiums and the number of uninsured, unless adequate alternative mechanisms are implemented. In addition, the Academy's HPC has concerns about the bill's inclusion of an elimination of the individual mandate being motivated as a means to offset revenue reductions in your efforts to provide tax cuts and reform the tax code."
Health Practice Council, American Academy of Actuaries

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[Opinion]

Remembering Uwe Reinhardt
"Uwe E. Reinhardt, James Madison Professor of Political Economy and professor of economics and public affairs at Princeton University's Woodrow Wilson School of Public and International Affairs, passed away on Monday, Nov. 13, at the age of 80.... As a Founding Member of the National Academy of Social Insurance, Uwe was extraordinary in his commitment to our mission, and he made a number of significant contributions to the Academy's work."
National Academy of Social Insurance [NASI]

Benefits in General

New, Free Daily Publication: The Message Boards Digest
Subscribe to the new, free Message Boards Digest, sent daily by email. You'll get a summary of all new topics on the BenefitsLink message boards, including the number of times each topic has been viewed, and how many replies it has received. (Some topics are included in the BenefitsLink newsletters, but many are not.) Subscribe now!
BenefitsLink

Senate Finance Committee Releases Text of Committee-Approved Tax Bill
Documents pertaining to the Tax Cuts and Jobs Act, as passed by the Senate Finance Committee: the text of the bill, a section-by-section description of the bill, and the Joint Committee on Taxation's score of the bill.
Committee on Finance, U.S. Senate

Tax Reform Legislation Moves Through the House and Senate (PDF)
"[Both bills] contain several provisions that would change the tax rules with respect to retirement plans, executive and nonqualified deferred compensation (NQDC') arrangements, employee fringe benefits, and health and welfare plans. [Includes a link to a] side-by-side summary comparing the retirement, executive compensation, fringe benefit, and health and welfare provisions in the House and Senate bills[.]"
Groom Law Group

Tax Reform: Side-by-Side Comparison of Employee Benefit Provisions of House and Senate Bills
"The House initially took a heavy hand to many favorable executive compensation provisions and made some important changes in the retirement and welfare areas, but the House Ways and Means Committee relented a bit. The Senate Finance Committee proposal, as modified ... followed suit in its approach to executive compensation."
Seyfarth Shaw LLP

Executive Compensation
and Nonqualified Plans

No More Procrastination: The Pay Ratio Has Arrived
"While public companies with high ratios may encounter negative press, it is not clear how investors will react to the ratios disclosed, at least during this first year of disclosure. Institutional Shareholder Services (ISS) ... found that 63% of investor respondents indicated that they did intend use the pay ratio to make comparisons between companies and to make comparisons between ratios for the same company year after year."
Mayer Brown

Implications for Employers Who Delay Deferred Compensation FICA Taxation
"If an employer discovers an omission of FICA withholding on an employees deferred compensation after the statute of limitations has passed, the employer must follow the general timing rule and the deferred compensation will be subject to FICA tax when paid. Due to this error on the part of the employer, the employer and employee could be subject to higher FICA taxes, since they were unable to take advantage of the special timing rule."
WithumSmith+Brown, PC

Discussions
on the BenefitsLink Message Boards

Handling Differing Vesting Schedules When Plans Merge
Company A (surviving plan) acquires Company B and the plans will be merged effective 1/1/2017. For the company match, Company A (surviving plan) has a 1-5 year graded vesting schedule and Company B has a 4 year graded schedule Can Company B increase the existing matching vesting schedule to 100% vesting for existing participants and then be on the same vesting schedule as Company A (surviving plan) for any new matching contributions effective 1/1/2017? Or does the merged plan need to keep the Company B employees who were eligible before 1/1/2017 on the more favorable 4 year graded vesting schedule?
BenefitsLink Message Boards

409A Situation: Will Similar Awards in Different Years Be Aggregated?
We have some deferred compensation awards, subject to 409A, that were granted in 2016. We've discovered they violate 409A. The errors are such that they cannot be corrected, so several participants are in violation of 409A and subject to the 20% penalty. We've corrected the plan errors going forward and would like to award some of these participants similar awards for 2018. If we do that, will the 2016 and 2018 awards be aggregated, such that if the 2016 awards violate 409A, so will the 2018 awards, and ALL that deferred comp is subject to the 20% penalty?
BenefitsLink Message Boards

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2017 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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